Little change on Wall Street ahead of closely watched earnings

By Joyce Yu

U.S. stock markets traded in narrow ranges on Monday as investors stayed on the sidelines ahead of corporate earnings reports which will offer some clues as to whether the trend of rising equities remains intact.

Following a robust July employment report released last week that showed U.S. employers added more jobs than expected in the month, the Dow Jones Industrial Average closed at a record high for the eighth straight session on Friday. All three major indices were little changed on Monday morning.

At 11:10 a.m. ET, the Dow was down 6.65 points, or 0.03 percent, at 22,086.16, the Nasdaq was up 0.34 percent, while the S&P 500 down 0.01 percent.

Craig Erlam, senior market analyst at online forex broker Oanda, told the Reuters that, “The jobs report was quite well-received on Friday despite suffering the same pitfall that has plagued the US recovery for years, inadequate wage growth.”

The strong jobs report is likely to clear the way for the Federal Reserve to announce a plan to start shrinking its $4.2 trillion bond portfolio in September, and could strengthen its case to raise rates for the third time this year in December.

A rate hike would be a boost for the greenback. But as the lift fades from the newest jobs report, the dollar index fell from its Friday peak, a five-session high.

As Viraj Patel, FX strategist at ING, puts it, “It will take more than one decent data point in the US to offset near-term headwinds for the dollar.” “There is general dollar nervousness right now, related to uncertainty over the US political environment.”

Meanwhile, investors will continue to monitor closely the second-quarter earnings to see if the current market valuations are justified.

The S&P is trading at 18 times expected earnings, compared to its 10-year average of 14. Meanwhile, analysts, on average, expect S&P 500 earnings to have grown 12 percent in the second quarter and they project earnings up 9.3 percent for the September quarter, according to data form the Thomson Reuters.

Companies that are going to release their earnings today include Marriott, which saw its share price up 27% so far this year, and media company CBS.

More companies will issue earning reports this week. This includes:

Tuesday: Disney (DIS), CVS (CVS), Michael Kors (KORS), Ralph Lauren (RL);

Wednesday: Mylan (MYL), 21st Century Fox (FOX);

Thursday: Snap (SNAP), Blue Apron (APRN), NVIDIA (NVDA, Tech30), Macy’s (M), Nordstrom(JWN), and Kohl’s (KSS);

Friday: J. C. Penney.